Property Ownership Here In Pattaya / Thailand

[Pattaya46]

agents inflate prices by as much as 100% and that was disclosed to me by an agent who took great pleasure in telling me that you get quite a number of idiots who just part with their money so easy

Sorry but I disagree. What you say is ridiculous (as I see you like this word ).

I had the opportunity to talk with some of them outside of any business relation (friends of relatives). Most of them only take 6% or 7% of the houses selling price as their commission. The price is nearly always imposed by the seller/owner, and most agents are very sad of the high prices these owners want to get because they know they will not sell at this price .

Don't forget that the aim of agents is to sell! Getting the best price is secondary. If they don't sell they get no money, and there are many agents in Pattaya who did not sell a house for years! Luckily they can live by most easy sales of condo and apartments.

You will find these crazy prices for houses even on Internet or public boards (Carrefour, FriendShip,...) where no agent is involved.

Saying that "agents inflate prices by as much as 100%" is ridiculous.

[PattayaParent]

In the UK you would expect to pay on average 1000 pounds a square meter for building costs. This is just to build a property not taking into account the price of the land.

So if your property size is 200m2 (size of house)regardless of size of land then it would cost roughly 200k pounds to build in the UK.

Factor that in and do your sums, ask the developer what the building will be made from and to what specs, ie will it be European design and standards. Will he be importing material, marble floors/tiling etc. This will no doubt add to the cost.

Factor in the land, then you have what would be a fair price.

On another note I do believe there a lot of bargains to be had. Falang moves back to Uk needs to sell in 6 months - Thai girls husband dies and leaves her the house she sells the house for 4 million even though it was bought for 7 million - A lot of houses/condo's are forced by the gvnt to be sold within 1 year which encourages people to drop the price to ridiculous levels towards the end of the year.

Its not difficult to see why Pattaya has an unstable property market.

You can't calculate the cost of building a house in Thailand based on the cost of building a house in UK but that's maybe why places are so overpriced here, people calculate like you do.

[PattayaParent]

This thread makes an interesting read. The should I buy / rent dilemma is pertinent to me as I have decided to settle here after numerous visits and now a year, more or less full-time, here.

I pay rent of 13K per month for a 55 sq.m., one bedroom condo in Central Pattaya. This building is exactly where I want to be; between Beach and 2nd Rd and a stones throw from The Avenue complex. I guess a similar condo would cost approx 3 million THB according to some of the adverts in the local newspapers, perhaps a bit more.

Keeping things simple (i.e. not allowing for rent inflation or appreciation of a purchased condo or long-term currency fluctuations), that capital cost equates to almost 20 years of renting ! I think I would be mad to buy at the moment, or in the near future.

Simon

Its worse than that:

By the time you've factored in the transfer tax, business tax, yearly property taxes, condo maintenance fees, extra costs of fixing things that owners need to pay for, renovations blah blah blah you would probably find its more like 30 years of rent to breakeven.

The only way it makes sense to buy is if you believe in significant capital appreciation.

the problem with this is that you have not factored in any rental increases over the 20/30 years. Also, provided your property has some residual value left after the 20/30 years it will not be a break even point since the renter has nothing.

Umm, a breakeven point is the numbers of years of renting it out a landlord would need in order to breakeven on his investment. In this case the answer is 30. You seem to have some problem with making mathematically watertight and properly defined statements. or is it that you don't understand them?

<snip>

So if an investor sells the property after 20 years for the same price he paid for it he's made a loss on his investment?

[joker7]

You can't calculate the cost of building a house in Thailand based on the cost of building a house in UK but that's maybe why places are so overpriced here, people calculate like you do.

You are assuming I said that - you should learn to read.

It is an example only - nothing more. It is there to give people perspective of what it costs in the UK to build a house not to build a house in Thailand. If you believe a 500m2 house + cost of the land in Thailand should be priced at 3 million baht then good luck finding one as youll be searching for about 100 years.

[PattayaParent]

It is an example only - nothing more. It is there to give people perspective of what it costs in the UK to build a house not to build a house in Thailand.

you did.

Edited June 8, 2011 by Rimmer
Quoted reply of deleted post

[Rimmer]

Argumentative and inflammatory posts removed from view. If you wish to take part in the discussion about Property Ownership Here In Pattaya please be nice or risk having your post removed.

[Awohalitsiktoli]

Long enough to know better than to even think about marrying some sweet little thing working in a bar.

OK, that is definitely long enough

Interesting post by Smedly who said: The property price here is artificially inflated by a network of realestate companies of which quite a few are run by falangs, just because you see an ask price on a property - it does not mean that the property is correctly priced, agents inflate prices by as much as 100% and that was disclosed to me by an agent who took great pleasure in telling me that you get quite a number of idiots who just part with their money so easy,

I agree with that view. The market is currently grossly overpriced and the "real estate network" (do they all get together and meet and plan and scheme somewhere?) is doing what it can to keep the ship afloat with a series of myths. But, as long as a sucker is there for the taking, the game will continue.

[LennyW]

Fact

I had the opportunity to talk with some of them outside of any business relation (friends of relatives). Most of them only take 6% or 7% of the houses selling price as their commission. The price is nearly always imposed by the seller/owner, and most agents are very sad of the high prices these owners want to get because they know they will not sell at this price .

Don't forget that the aim of agents is to sell! Getting the best price is secondary. If they don't sell they get no money, and there are many agents in Pattaya who did not sell a house for years! Luckily they can live by most easy sales of condo and apartments.

You will find these crazy prices for houses even on Internet or public boards (Carrefour, FriendShip,...) where no agent is involved.

Saying that "agents inflate prices by as much as 100%" is ridiculous.

Fiction

The property price here is artificially inflated by a network of realestate companies of which quite a few are run by falangs, just because you see an ask price on a property - it does not mean that the property is correctly priced, agents inflate prices by as much as 100% and that was disclosed to me by an agent who took great pleasure in telling me that you get quite a number of idiots who just part with their money so easy,

Never in my many years of dealing with most of the Pattaya real estate agents have i heard any of them advise a seller to inflate the price for their property, think about it, why would they ? it is exactly as Pattaya46 stated, and that is from extensive personal experience - not bar talk or wild imagination!!

But the topic is "Property ownership here in Thailand / Pattaya, was it worth it?" NOT would it be worth it.

I would like to hear more accounts of peoples actual experiences - if they have made or lost money on their property dealings here.

[morphic]

So if an investor sells the property after 20 years for the same price he paid for it he's made a loss on his investment?

No, if the breakeven is 30 years as in the example then after 30 years the rent (minus expenses) has paid for the property. This assumes he is a cash buyer. So if he started with 2 million baht in his account and used that to buy the condo then 30 years later that emptied account will have 2 million baht in it again and he will still own the condo, which is now 30 years older.

So in absolute terms the buyer has made something but in real terms not much. The buyer has essentially doubled his money after 30 years, assuming the condo could then be sold for 2 million again. But, this may be a very bad profit. That is because alternative investments may have yielded far more. In fact, taking the last 30 years as an example, buying US Treasury bonds and reinvesting the coupons (average yield 7%) would have resulted in the original 2 million growing by 800% to 16 million. Or, investing in the Dow Jones and reinvesting the dividend would have resulted in about the same.

The question is what will provide the best return over time, buying the condo and collecting the rent or renting and investing in something else.

Over the past 10 years property has performed very well and lots of people assume it will always do that. But the past 10-20 years has been very unusual and it is quite possible property may now under perform. My view is that unless you find something that is really special then investing in Pattaya is probably a bad idea. For one thing prices seem very high. But also the quality seems very low and selling older properties in the resale market can be very hard unless the seller is willing to make big cuts compared to general asking prices.

[johnnyk]

I own a house that I like and enjoy very much. I have a pool, nice garden, 3 beds 2 bathrooms, nice neighbours etc etc. I do like coming back knowing all my stuff is where I left it.

That said, after 5 years I don't think I would do it again. Property is not very liquid and there are costs of about $1200/year. If I was to do things again I would rent a nice condo for 25-30K/month for four months every year. Factoring in my purchase price + yearly outgoings I could rent a nice condo for 30 years or more with no money tied up and I could eff off quickly if need be.

Edited June 8, 2011 by johnnyk

[PattayaParent]

So if an investor sells the property after 20 years for the same price he paid for it he's made a loss on his investment?

No, if the breakeven is 30 years as in the example then after 30 years the rent (minus expenses) has paid for the property. This assumes he is a cash buyer. So if he started with 2 million baht in his account and used that to buy the condo then 30 years later that emptied account will have 2 million baht in it again and he will still own the condo, which is now 30 years older.

So in absolute terms the buyer has made something but in real terms not much. The buyer has essentially doubled his money after 30 years, assuming the condo could then be sold for 2 million again. But, this may be a very bad profit. That is because alternative investments may have yielded far more. In fact, taking the last 30 years as an example, buying US Treasury bonds and reinvesting the coupons (average yield 7%) would have resulted in the original 2 million growing by 800% to 16 million. Or, investing in the Dow Jones and reinvesting the dividend would have resulted in about the same.

The question is what will provide the best return over time, buying the condo and collecting the rent or renting and investing in something else.

Over the past 10 years property has performed very well and lots of people assume it will always do that. But the past 10-20 years has been very unusual and it is quite possible property may now under perform. My view is that unless you find something that is really special then investing in Pattaya is probably a bad idea. For one thing prices seem very high. But also the quality seems very low and selling older properties in the resale market can be very hard unless the seller is willing to make big cuts compared to general asking prices.

So he's not at breakeven point after 30 years, he's really doubled his money.

[gerry53]

I own a house that I like and enjoy very much. I have a pool, nice garden, 3 beds 2 bathrooms, nice neighbours etc etc. I do like coming back knowing all my stuff is where I left it.

That said, after 5 years I don't think I would do it again. Property is not very liquid and there are costs of about $1200/year. If I was to do things again I would rent a nice condo for 25-30K/month for four months every year. Factoring in my purchase price + yearly outgoings I could rent a nice condo for 30 years or more with no money tied up and I could eff off quickly if need be.

Thanks for the objective advice johnnyk, I was thinking of purchasing but you are correct about tying up your money. I do good on private investments and I would be much further ahead renting. I also like having the flexibilty to leave or change locations because of bad neigbors, political issues, village maintenance etc. - you never know and I see so many people trying to sell these days.

[morphic]

So if an investor sells the property after 20 years for the same price he paid for it he's made a loss on his investment?

No, if the breakeven is 30 years as in the example then after 30 years the rent (minus expenses) has paid for the property. This assumes he is a cash buyer. So if he started with 2 million baht in his account and used that to buy the condo then 30 years later that emptied account will have 2 million baht in it again and he will still own the condo, which is now 30 years older.

So in absolute terms the buyer has made something but in real terms not much. The buyer has essentially doubled his money after 30 years, assuming the condo could then be sold for 2 million again. But, this may be a very bad profit. That is because alternative investments may have yielded far more. In fact, taking the last 30 years as an example, buying US Treasury bonds and reinvesting the coupons (average yield 7%) would have resulted in the original 2 million growing by 800% to 16 million. Or, investing in the Dow Jones and reinvesting the dividend would have resulted in about the same.

The question is what will provide the best return over time, buying the condo and collecting the rent or renting and investing in something else.

Over the past 10 years property has performed very well and lots of people assume it will always do that. But the past 10-20 years has been very unusual and it is quite possible property may now under perform. My view is that unless you find something that is really special then investing in Pattaya is probably a bad idea. For one thing prices seem very high. But also the quality seems very low and selling older properties in the resale market can be very hard unless the seller is willing to make big cuts compared to general asking prices.

So he's not at breakeven point after 30 years, he's really doubled his money.

I defined breakeven for you within this context, its the numbers of years of rental it takes to cover the principal cost of purchase. Not sure I can make this any simpler for you.

I gave the example of a cash buyer and I didn't factor in the interest or other investment returns he would have lost having used his capital that way. I tried to give you examples showing what a terrible investment it would be if after 30 years he sold for the same as he purchased it for but that seems to have gone in one ear and out the other, or just over your head entirely.

So here is one more attempt, although I imagine you will get the wrong end of the stick again and after that I will just ignore you, no further point in attempting sensible discourse.

So, if he borrowed the money to buy and paid interest over those years he would have lost a huge amount of money, even though he would have recouped the original purchase capital.

Or, if he used his own capital then he would have lost hugely compared to having invested at the available risk free rates.

Either way, in this case, he has lost hugely.

So, to actually break even in real terms, i.e., a dollar 30 years ago compared to a dollar now in purchasing power terms, he needs to sell the property at hundreds of % higher than he bought it for.

[smedly]

Long enough to know better than to even think about marrying some sweet little thing working in a bar.

OK, that is definitely long enough

Interesting post by Smedly who said: The property price here is artificially inflated by a network of realestate companies of which quite a few are run by falangs, just because you see an ask price on a property - it does not mean that the property is correctly priced, agents inflate prices by as much as 100% and that was disclosed to me by an agent who took great pleasure in telling me that you get quite a number of idiots who just part with their money so easy,

I agree with that view. The market is currently grossly overpriced and the "real estate network" (do they all get together and meet and plan and scheme somewhere?) is doing what it can to keep the ship afloat with a series of myths. But, as long as a sucker is there for the taking, the game will continue.

it all goes back to when the house was bought new, you will find the agencies are involved in the building of many developments here - they are not independant, then the poor victim dictates a secondhand sell price based on what he paid for it to the same agency- then suddenly realises that the 6 million baht they parted with was 3 million too much, yes the agent sells for what the owner asks but in reality the agent (if doing their job) should suggest a market price and if it's the same agent the person bought from they are hardly going to tell them it's worth 3 million and not the 6 million they parted with a few years ago...........the whole thing is a big scam and many have been scammed - few would admit it

Edited June 9, 2011 by smedly

[ciaociao]

So if an investor sells the property after 20 years for the same price he paid for it he's made a loss on his investment?

No, if the breakeven is 30 years as in the example then after 30 years the rent (minus expenses) has paid for the property. This assumes he is a cash buyer. So if he started with 2 million baht in his account and used that to buy the condo then 30 years later that emptied account will have 2 million baht in it again and he will still own the condo, which is now 30 years older.

So in absolute terms the buyer has made something but in real terms not much. The buyer has essentially doubled his money after 30 years, assuming the condo could then be sold for 2 million again. But, this may be a very bad profit. That is because alternative investments may have yielded far more. In fact, taking the last 30 years as an example, buying US Treasury bonds and reinvesting the coupons (average yield 7%) would have resulted in the original 2 million growing by 800% to 16 million. Or, investing in the Dow Jones and reinvesting the dividend would have resulted in about the same.

The question is what will provide the best return over time, buying the condo and collecting the rent or renting and investing in something else.

Over the past 10 years property has performed very well and lots of people assume it will always do that. But the past 10-20 years has been very unusual and it is quite possible property may now under perform. My view is that unless you find something that is really special then investing in Pattaya is probably a bad idea. For one thing prices seem very high. But also the quality seems very low and selling older properties in the resale market can be very hard unless the seller is willing to make big cuts compared to general asking prices.

So he's not at breakeven point after 30 years, he's really doubled his money.

I defined breakeven for you within this context, its the numbers of years of rental it takes to cover the principal cost of purchase. Not sure I can make this any simpler for you.

I gave the example of a cash buyer and I didn't factor in the interest or other investment returns he would have lost having used his capital that way. I tried to give you examples showing what a terrible investment it would be if after 30 years he sold for the same as he purchased it for but that seems to have gone in one ear and out the other, or just over your head entirely.

So here is one more attempt, although I imagine you will get the wrong end of the stick again and after that I will just ignore you, no further point in attempting sensible discourse.

So, if he borrowed the money to buy and paid interest over those years he would have lost a huge amount of money, even though he would have recouped the original purchase capital.

Or, if he used his own capital then he would have lost hugely compared to having invested at the available risk free rates.

Either way, in this case, he has lost hugely.

So, to actually break even in real terms, i.e., a dollar 30 years ago compared to a dollar now in purchasing power terms, he needs to sell the property at hundreds of % higher than he bought it for.

:whistling:Are property taxes and mortgage interest deductable from income tax??B)B)

[PattayaParent]

So if an investor sells the property after 20 years for the same price he paid for it he's made a loss on his investment?

No, if the breakeven is 30 years as in the example then after 30 years the rent (minus expenses) has paid for the property. This assumes he is a cash buyer. So if he started with 2 million baht in his account and used that to buy the condo then 30 years later that emptied account will have 2 million baht in it again and he will still own the condo, which is now 30 years older.

So in absolute terms the buyer has made something but in real terms not much. The buyer has essentially doubled his money after 30 years, assuming the condo could then be sold for 2 million again. But, this may be a very bad profit. That is because alternative investments may have yielded far more. In fact, taking the last 30 years as an example, buying US Treasury bonds and reinvesting the coupons (average yield 7%) would have resulted in the original 2 million growing by 800% to 16 million. Or, investing in the Dow Jones and reinvesting the dividend would have resulted in about the same.

The question is what will provide the best return over time, buying the condo and collecting the rent or renting and investing in something else.

Over the past 10 years property has performed very well and lots of people assume it will always do that. But the past 10-20 years has been very unusual and it is quite possible property may now under perform. My view is that unless you find something that is really special then investing in Pattaya is probably a bad idea. For one thing prices seem very high. But also the quality seems very low and selling older properties in the resale market can be very hard unless the seller is willing to make big cuts compared to general asking prices.

So he's not at breakeven point after 30 years, he's really doubled his money.

I defined breakeven for you within this context, its the numbers of years of rental it takes to cover the principal cost of purchase. Not sure I can make this any simpler for you.

I gave the example of a cash buyer and I didn't factor in the interest or other investment returns he would have lost having used his capital that way. I tried to give you examples showing what a terrible investment it would be if after 30 years he sold for the same as he purchased it for but that seems to have gone in one ear and out the other, or just over your head entirely.

So here is one more attempt, although I imagine you will get the wrong end of the stick again and after that I will just ignore you, no further point in attempting sensible discourse.

So, if he borrowed the money to buy and paid interest over those years he would have lost a huge amount of money, even though he would have recouped the original purchase capital.

Or, if he used his own capital then he would have lost hugely compared to having invested at the available risk free rates.

Either way, in this case, he has lost hugely.

So, to actually break even in real terms, i.e., a dollar 30 years ago compared to a dollar now in purchasing power terms, he needs to sell the property at hundreds of % higher than he bought it for.

well if you start out with an incorrect premise then you will naturally arrive at an incorrect solution as you have demonstrated yourself.

[morphic]

I'm amazed I really need to repeat myself again.

I defined the number of years taken to recoup principal as breakeven. I don't care whether you are confused by the use of the term, but I defined it, I made it clear I was defining it that way. Its not a declaration or a premise, its a definition. I could call it anything I like, but I decided to call it "breakeven" as that should make sense to most people given the context. Selling at the breakeven point for the original cost is just an example. It might be zero, you might have to leave the country and lose it, your wife might steal it. The point is no matter what happens to the value of the property in 30 years you will have recouped the cost, assuming constant rent, by then.

Now do you, finally, get it?

And do you now get that a definition and a premise are not the same thing?

[PattayaParent]

Well then, lets just say that your premise that your definition is correct is erroneous and that is why your conclusion is also, even though you correctly stated that you make a profit.

Break even is a cash neutral position and if you have residual value in the property after 30 years and realise that value then that would normally be called the return on investment, or profit.

[Rimmer]

Inflammatory and argumentative posts also quoted replies deleted, in case we forgot see THIS

[morphic]

PattayaParent:

"Break even is a cash neutral position and if you have residual value in the property after 30 years and realise that value then that would normally be called the return on investment, or profit. "

I think I see where you are going wrong now. First, try to get your head around the idea of definition and context, if I tell you the definition I'm using then you have to try accept that definition as opposed to substituting your own and move on with the logic that follows. Secondly, what you fail to understand is the cost of funding your investment and/or the lost opportunity cost of investing elsewhere. Read and understand the actual post as opposed to taking individual sentences out of context and you may learn something.

Edited June 10, 2011 by craigt3365
removed derogatory section

[craigt3365]

One post deleted and a warning handed out. Rimmer just warned everybody, but seems some are not listening.

Back to the OP, please.